Amazon Outage Could Cost a Lot More Than 400,000 Pairs of Unsold Underwear

Imagine the front doors suddenly locked on every Walmart in the country simultaneously right in the middle of the business day — and for nearly an hour, no one could find the keys.

That’s basically what happened to Amazon when, in an incredibly rare hiccup, its homepage went down for nearly an hour Thursday afternoon.

Pundits and investors have been chattering all week about the resilience of Amazon’s share price despite ending 2012 in the red. I pointed out in an earlier post that Amazon’s sales are growing at a faster clip year-over-year than Walmart’s during the big-box giant’s ascendancy in the 1990s.

So when that sales engine grinds to a halt, that’s a lot more money lost than it used to be.

Amazon’s net sales for 2012 came in at $61.09 billion, a tripling over the past five years. That comes to an average of $116,229.07 in sales every minute. Amazon says its homepage was down for 49 minutes, which puts the total sales missed at nearly $5.7 million.

(For the sake of this thought experiment, I’m setting aside the fact that Amazon’s product pages still appeared to be accessible during the homepage crash, which means purchases could presumably still go through.)

So much stuff, but such a seemingly inconsequential amount for Amazon, like when a professional athlete gets fined more than $10,000 for wearing his socks wrong. But considering Amazon finished the year with a $39 million loss, just a few hours of lost sales starts to look like the difference between red and black. When your success as a company depends on skating by on razor-thin margins — and on the tolerance of shareholders for those margins — every million counts.

What’s more, reliability is a cornerstone of the Amazon brand. When you pay for two-day shipping, you expect to get your order in two days. When you sign up with Amazon as a third-party shipper, you expect them to keep track of your stuff and deliver it to the people who order it. Perhaps most tellingly in light of the homepage crash, when you build your website on top of Amazon Web Services, you expect your site to stay up. Amazon says yesterday’s outage didn’t affect AWS, which itself fails on a somewhat regularbasis. But when Amazon can’t keep its own front door open, even if just for the length of a lunch break, the damage to its image could end up costing millions more.